“In the United States today, we have more than our share of the nattering nabobs of negativism. They have formed their own 4-H Club — the ‘hopeless, hysterical hypochondriacs of history.'”
Republican VP Spiro Agnew spewing against criticism from the liberal media, September 25, 1970.
The prestigious UK periodical, The Economist, began (on October 17th) a series on the US economy, with headlines calling it “The envy of the world,” noting “America’s economy is bigger and better than ever,” while adding a cautionary “Will politics bring it back to Earth?” I have observed over the ages (yup, those ages) that spoiled children seldom think of themselves as spoiled; they live in a privileged world where “keeping up with the Joneses” makes a scion of wealth driving his/her M-class BMW down the street feel deprived when a classmate passes in a Porsche Turbo Carrera. Poor kid! Those $400 torn jeans just can’t compete with the young lady flashing her $30,000 Birkin handbag. That “reality” seems to be infecting MAGA adherents today.
We are the number one economy on earth, the most successful survivor in the post-pandemic economy, pay the lowest retail food prices on the planet, have truly low unemployment, high wages while inflation is fading as interest rates fall. Yes, for the reasons set out in my recent Food is Costing Too Much? Why? blog, prices for most retail goods, including food, have increased considerably since the pandemic. But we are in better shape than every other nation in the world. The interest rates, stimulus policies, the Biden inflation reduction and infrastructure investment bills, and the staggering levels of growth are not only taken for granted, they are lambasted by MAGA operatives with a never-ending and dramatically false narrative of how bad things are. Huh, the MAGA GOP seem to have become the 21st century “nattering nabobs of negativism” and “hopeless, hysterical hypochondriacs of history.”
Indeed, as The Economist points out, Americans have often engaged in economic self-flagellation, as in in the waning years of the last millennium, and “some are again painting pictures of an American economy heading towards decline. China is now the rising juggernaut in the East. Donald Trump, instead of Bill Clinton, is the candidate for president lamenting the state of the economy (Mr Trump says it is ‘failing’, where Mr Clinton called it an ‘unpleasant economy stuck somewhere between Germany and Sri Lanka’). Ordinary Americans are anxious. Gallup, a polling firm, regularly asks Americans if they are satisfied with how things are going. From 1980 until the early 2000s, a little more than 40%, on average, said they were. Over the past two decades that has dropped to 25%...
“On a per-person basis, American economic output is now about 40% higher than in western Europe and Canada, and 60% higher than in Japan—roughly twice as large as the gaps between them in 1990.” Huh? While there are some negatives to our growth-driven success – income inequality and the wealth gap have indeed widened – the solutions proposed by candidates on both sides of the aisle, catering to political soundbites, could easily unseat our economic success.
As David Leonhardt points out in the October 17th The Morning (NY Times newsfeed): “We live in a time of cynicism about what government can accomplish. Most Americans say they don’t have much trust in Washington, regardless of which party is in charge. Even when the federal government sets out to do something that Americans support, many wonder whether it can succeed.” The Trumpian dark and unrelenting messaging of failure seems to caught-on like a flu epidemic. We’re in great shape, but the policies taking shape on the campaign trail, if implemented, will probably do more harm than good. But we like stabbing ourselves in the back.
For example: Exclude income from tips and overtime, create subsidies for a litany of social issues… but the supremely dangerous economy killers seem to be emanating from the Prince (King?) of Darkness, Donald Trump. Just think how expensive it would be to deport the lowest cost labor in the United States: 1. From the physical cost of deportation to 2. The loss of those low-cost workers, to be replaced by much more expensive US-citizen workers (who don’t do that kind of work at any price). And then there are the Trump pledges of tariffs on virtually all imports, and vastly higher tariffs on nations we hate. And how would that impact US consumers, Donald?
As artfully presented by Greg Ip, writing for the October 16th Wall Street Journal, “By one estimate, [such] tariffs could reach their highest level since the 1930s… In the short run, some prices in the U.S. would rise, and growth might suffer as consumers and businesses adjust to the new taxes on imported goods. The long-term impact depends crucially on whether other countries retaliate, and how far Trump would be willing to negotiate. The outcome could be anything from an all-out trade war, to a new trading system among U.S. allies united by their collective frustration with China.
“A new Trump term may assume that ‘the global trading system of the late 20th century is not sustainable,’ said Oren Cass, founder of American Compass, a conservative think tank that is close to Trump advisers and backs Trump’s tariff plan. ‘The endgame here isn’t some kind of negotiation where we all get back to 1995,’ when the World Trade Organization came into force. Rather, it’s a ‘fundamental rebalancing.’
“The free trade consensus that prevailed from 1995 until Trump’s election in 2016 isn’t going to return even if Vice President Kamala Harris, the Democratic nominee, wins. She may add to the mix of tariffs imposed on China during Trump’s first term and manufacturing support overseen by President Biden. But these would represent incremental changes, whereas a re-elected Trump could fundamentally remake the world trading system.
“Trump’s plans remain shrouded in uncertainty. He has called for an across-the-board tariff of 10%, later suggested 10% to 20%, and at least once even said 50% to 200%... He has proposed a tariff of 60% on goods from China, or maybe more. He has also proposed reciprocity, or U.S. tariffs that match those of its partners. That should spare Mexico and Canada, which under the United States-Mexico-Canada Agreement negotiated in Trump’s first term don’t charge tariffs on the U.S. But Trump has separately said autos from Mexico would face tariffs of 100%. Mexico imposes no tariffs on U.S.-made autos... In short, no one knows what Trump has in mind…
“If it turns out that the tariff on China is 60% and the rest of the world is 10%, the U.S.’ average tariff, weighted by value of imports, would leap to 17% from 2.3% in 2023, and 1.5% in 2016, according to Evercore ISI, an investment bank. That would be the highest since the Great Depression, after Congress passed the Smoot-Hawley Tariff Act, which triggered a global surge in trade barriers.” Wow. And to think that most Americans trust that “bankruptcy king” and “convicted financial fraud meister” Donald John Trump is a better helmsman for the US economy than Kamala Harris? Even the projected budget deficits as to each candidate’s policies, reflected in the above chart generated by Trump’s alma mater (Wharton), give Harris the clear edge.
No Donald, while the US government would collect the tariff on imported goods, it is after all a de facto sales tax, the cost would be borne by consumers; the foreign government where the goods were produced would not pay them. And while you think that’s enough to fund the government, as you continue to slash taxes for the rich based on the clearly disproven “trickle down” economic theory, you somehow forgot to mention what heavily tariffed nations would do in retaliation. And you know there will be retaliation… there always is.
I’m Peter Dekom, and while it doesn’t take a rocket scientist or an economics PhD to see how Trump’s plans could easily and seriously tank our economy, his followers are governed by catchy, if not very dark, buzzwords and conspiracy theories… versus dealing with obvious facts.
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